Enjoy - if you hold.

CCZ updated val:
Zoono Group (ZNO)Sales agreements flowing faster and bigger, NZ$2.4m upfront this week BUYTarget Price: 342cps (from 295cps)Share price: 132cps | Market Capitalization: $216m Sales agreement with Al Rabban CapitalAs ZNO flagged last week when it mentioned that there were several substantial sales agreements being finalised, it has reported that it has signed the largest agreement to date at NZ$24.8m. The amount is for the first three years with NZ$4.8m in Y1, NZ$8.0m in Y2, and NZ$12.0m in Y3, with 10% increases in Y4 and Y5. The deal is a bulk supply deal with exclusivity over most of the Middle East region and North Africa. Al Rabban is a large Qatari conglomerate focused on water, plastics, construction, and real estate. It has already paid NZ$2.4m. This upfront payment is more than triple any previous upfront that Zoono has received.Bulk supply dealZNO stated that this supply agreement will be in 1,000 litre totes which Al Rabban will repackage locally. We highlight that last week the company announced demand has been so strong that it has ordered the equivalent of 6 million litres of product and 4 million bottles to service orders. Though it does not say over what period this will be fulfilled, this is roughly equivalent to NZ$100m in product sales. It is possible that this may become a more common feature of large supply agreements in the future.Astronomical growth continuesWe have, yet again, materially increased our revenue forecasts for the company. On the basis of the currently announced minimum sales agreements, excluding online sales, revenue for FY20 would be circa NZ$9.5m (see Fig.1 below for the updated table). We estimate online sales for the year at NZ$5m for the year. However, sales outside of these agreements continue to outrun even our most bullish expectations, with NZ$11m done in the first 11 weeks of 2020, and we now estimate total FY20 revenue at NZ$24.2m. Forecasting FY21 sales is now based largely on the established sales agreements plus some continued panic buying, totalling NZ$28.8m. As we have stated previously, both ongoing COVID-19 related buying and the weaker NZD are upside risks to the sales total.Retain BUY increased Target PriceWe have used a DCF valuation approach to determine a valuation for ZNO applying different growth rates for the different major market geographies. Valuation has increased in line with the higher forecast revenues partly offset by a more conservative view on terminal growth rates for both developed and developing markets after the much faster revenue growth in the early years in the model. Though the valuation multiples are still high, the company is outrunning all sales forecasts and growth is likely to continue to surprise on the upside. Accordingly, our Target Price has increased to 342cps (AUD). Andrew HarringtonEquities Analyst